Filed 6/15/21 Lile v. Mr. Wheels CA2/8
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
DAVID LILE, B303239
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 19STCV30636)
v.
MR. WHEELS, INC.,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los
Angeles County. Richard J. Burdge, Jr., Judge. Reversed and
remanded.
Fisher & Phillips, Christopher C. Hoffman, Megan E.
Walker and Kevonna J. Ahmad for Defendant and Appellant.
Stevens & McMillan, Daniel P. Stevens, Heather K.
McMillan and Lizeth Perales for Plaintiff and Respondent.
**********
Defendant and appellant Mr. Wheels, Inc., doing business
as AutoNation Toyota Cerritos, appeals from the order denying
its motion to compel arbitration of plaintiff and respondent David
Lile’s individual claims. Plaintiff, defendant’s former employee,
did not allege any class action, private attorney general or
representative claims.
We reverse and remand with directions to the trial court to
vacate its order and enter a new order granting defendant’s
motion.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff worked for defendant from 1980 until his
termination of employment in October 2018. After his
termination, plaintiff sued defendant for disability
discrimination, wrongful termination and various claims alleging
violations of the Labor Code. Plaintiff did not allege any cause of
action under the Labor Code Private Attorneys General Act of
2004 (PAGA; Lab. Code, § 2698 et seq.) or any class or
representative claims of any kind.
Defendant filed a motion to compel arbitration. In support
of its motion, defendant attached a copy of a two-page agreement,
signed by plaintiff in April 2013, titled “Arbitration Agreement.”
Under the heading “Waiver of Right to Participate in Class
Actions,” the agreement states: “Employee understands and
acknowledges that the terms of this Agreement include a waiver
of any substantive or procedural rights that Employee may have
to bring or participate in an action on a class, collective, private
attorney general, representative or other similar basis. This
class action waiver does not take away or restrict the right of
Employee to pursue Employee’s own claims, but only requires
that any such claims be pursued in Employee’s own individual
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capacity, rather than on a class, collective, private attorney
general, representative or similar basis.”
The agreement also contains a severability provision that
includes a non-severability clause: “[i]f any portion of this
Agreement is deemed invalid or unenforceable, it shall not
invalidate the other provisions of this Agreement; provided
however, that if the provision prohibiting classwide arbitration is
deemed invalid or unenforceable, then this entire Arbitration
Agreement shall be null and void.” (Italics added.)
In opposing the motion, plaintiff argued the non-
severability clause includes both class actions and PAGA claims,
and since a waiver of PAGA claims is unenforceable, the entire
arbitration agreement is null and void. Further, plaintiff argued
that to the extent the provision was ambiguous, the ambiguity
must be construed against defendant as the drafting party. He
also made an unconscionability argument in the alternative.
Defendant replied that plaintiff’s individual claims fell
within the scope of the agreement, the PAGA waiver was
severable, and plaintiff failed to show any procedural or
substantive unconscionability, other than the arbitration
agreement was a contract of adhesion—a fact which did not make
it per se unenforceable.
After argument and supplemental briefing, the trial court
found the agreement was null and void and denied defendant’s
motion. The court did not reach the unconscionability issue.
This appeal followed.
DISCUSSION
We are asked to decide whether the trial court correctly
construed the language of the parties’ arbitration agreement.
Our review of this issue is de novo. (Mendez v. Mid-Wilshire
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Health Care Center (2013) 220 Cal.App.4th 534, 541 [“where the
trial court’s denial of a petition to arbitrate presents a pure
question of law, we review the order de novo”]; Securitas Security
Services USA, Inc. v. Superior Court (2015) 234 Cal.App.4th
1109, 1116 (Securitas) [“ ‘in cases where “no conflicting extrinsic
evidence is introduced to aid the interpretation of an agreement
to arbitrate, the Court of Appeal reviews de novo a trial court’s
ruling on a petition to compel arbitration” ’ ”].)
In resolving a motion to compel arbitration, the “parties’
contractual intent is paramount . . . . [T]he ‘overarching principle
[is] that arbitration is a matter of contract’ and ‘courts must
“rigorously enforce” arbitration agreements according to their
terms.’ ” (Securitas, supra, 234 Cal.App.4th at p. 1125.)
The arbitration agreement here clearly provides that any
claim “arising from, related to, or having any relationship or
connection whatsoever with Employee’s seeking employment
with, employment by, termination of employment from, or other
association with the Company, shall be resolved through
mandatory, neutral, binding arbitration on an individual basis
only.” The agreement expressly states that any arbitration
conducted pursuant to the agreement shall be governed by the
Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.).
There is no dispute that all of plaintiff’s claims were
individual claims arising from his employment and termination
by defendant—claims that fall squarely within the scope of the
arbitration agreement. At no point did plaintiff seek to amend
his pleading to include a claim under PAGA or any type of class
or other representative claim.
Nevertheless, plaintiff argued, and the trial court agreed,
that because PAGA waivers are unenforceable, the entire
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arbitration agreement here was null and void because it
contained a PAGA waiver—despite the fact plaintiff has not
alleged any PAGA claim, and defendant has never sought to
enforce a PAGA waiver.
More than a year after the parties entered into the
arbitration agreement, our Supreme Court issued its decision in
Iskanian v. CLS Transportation Los Angeles (2014) 59 Cal.4th
348 in which it concluded that “an arbitration agreement
requiring an employee as a condition of employment to give up
the right to bring representative PAGA actions in any forum is
contrary to public policy” and further, that “the FAA does not
preempt a state law that prohibits waiver of PAGA
representative actions in an employment contract.” (Id. at p. 360;
see also Correia v. NB Baker Electric, Inc. (2019) 32 Cal.App.5th
602, 622 [“Without the state’s consent, a predispute agreement
between an employee and an employer cannot be the basis for
compelling arbitration of a representative PAGA claim because
the state is the owner of the claim and the real party in
interest, and the state was not a party to the arbitration
agreement.”].
Plaintiff’s chief argument is the trial court correctly
construed the severability provision (including the non-
severability clause that renders the entire arbitration agreement
null and void if the class action waiver is deemed unenforceable)
to include class, collective, private attorney general, and any
other representative action. Therefore, since PAGA waivers are
unenforceable, the non-severability clause renders the entire
arbitration agreement null and void. Defendant argues the non-
severability clause does not include the PAGA waiver.
We think it is fair to interpret the severability provision to
prohibit severability of PAGA claims. But we do not need to
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decide whether the severability provision is ambiguous and
should be construed against defendant. That issue is entirely
academic in this case for the simple reason plaintiff did not bring
a class, collective, private attorney general, or other such
representative action, thus there was no basis for triggering the
non-severability clause. Defendant’s motion to compel
arbitration did not seek to enforce either a waiver of a class
action or a waiver of a PAGA claim. The provisions in the
arbitration agreement concerning the waiver of class or
representative actions and the non-severability clause are
surplusage in this case. Defendant’s motion sought to compel
arbitration of plaintiff’s individual claims, all of which were
plainly covered by the arbitration agreement.
The cases cited by plaintiff where arbitration has been
denied due to a PAGA waiver are distinguishable as all of them
were brought by plaintiffs asserting a PAGA claim. (See, e.g.,
Kec v. Superior Court of Orange County (2020) 51 Cal.App.5th
972; Juarez v. Wash Depot Holdings, Inc. (2018) 24 Cal.App.5th
1197; Franco v. Arakelian Enterprises, Inc. (2015)
234 Cal.App.4th 947; Securitas, supra, 234 Cal.App.4th 1109.)
Plaintiff has not cited any case in which a court denied
arbitration because of a PAGA waiver where only individual
claims were raised by the plaintiff, nor have we found any.
Moreover, there is nothing in the record to support a
conclusion the arbitration agreement was unenforceable due to
unconscionability. (AT&T Mobility LLC v. Concepcion (2011)
563 U.S. 333, 339 (Concepcion) [section 2 of the FAA allows
arbitration agreements to be “invalidated by ‘generally applicable
contract defenses, such as fraud, duress, or unconscionability’ ”];
see also Code Civ. Proc., § 1281 [“A written agreement to submit
to arbitration an existing controversy or a controversy thereafter
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arising is valid, enforceable and irrevocable, save upon such
grounds as exist for the revocation of any contract.”].)
“ ‘[U]nconscionability has both a “procedural” and a
“substantive” element,’ the former focusing on ‘ “oppression” ’ or
‘ “surprise” ’ due to unequal bargaining power, the latter on
‘ “overly harsh” ’ or ‘ “one-sided” ’ results. [Citation.] ‘The
prevailing view is that [procedural and substantive
unconscionability] must both be present in order for a court to
exercise its discretion to refuse to enforce a contract or clause
under the doctrine of unconscionability.’ [Citation.] But they
need not be present in the same degree.” (Armendariz v.
Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83,
114, abrogated in part as stated in Concepcion, supra, 563 U.S.
333.)
Plaintiff argues only that the agreement was a contract of
adhesion and that it was substantively unconscionable because of
the class action waiver which allows defendant to choose the
forum. The fact plaintiff was required to sign the agreement as a
condition of his continued employment with defendant is minimal
procedural unconscionability. (Gilmer v. Interstate/Johnson
Lane Corp. (1991) 500 U.S. 20, 33 [“Mere inequality in bargaining
power, however, is not a sufficient reason to hold that arbitration
agreements are never enforceable in the employment context.”].)
As for the class action waiver, defendant has not sought to
enforce that provision and, as we already explained, it is not even
at issue since plaintiff has not raised any class or PAGA claims.
Plaintiff has not demonstrated unconscionability.
DISPOSITION
The order denying defendant’s motion to compel arbitration
is reversed and the case remanded to the superior court with
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directions to vacate its order and enter a new order granting
defendant’s motion.
Defendant shall recover its costs of appeal.
GRIMES, Acting P. J.
WE CONCUR:
STRATTON, J.
OHTA, J.*
* Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.
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